In China, Private Equity Firms Shun IPOs for Exits

With China’s initial public offering market closed for almost a year now, Chinese private equity firms that traditionally took their investments public as an exit are increasingly looking towards selling these companies to other companies.

“IPOs as an exit, in Asia, are overrated. As the market matures, there will be less focus on IPOs,” said Yichen Zhang, chief executive of Citic Capital, at the SuperReturns Asia 2013 conference in Hong Kong.

Examples of so-called trade sales by private equity firms of their stakes in Chinese companies remain thin on the ground, but there have been a handful in recent months. Shanghai-headquartered private equity firm Lunar Capital, for instance, sold its online payment provider SmartPay to an affiliate of Chinese insurer Ping An Insurance, which is bulking up its bank.